Working Paper: CEPR ID: DP6291
Authors: Nicholas Bloom; Raffaella Sadun; John Van Reenen
Abstract: The US has experienced a sustained increase in productivity growth since the mid-1990s, particularly in sectors that intensively use information technologies (IT). This has not occurred in Europe. If the US ?productivity miracle? is due to a natural advantage of being located in the US then we would not expect to see any evidence of it for US establishments located abroad. This paper shows in fact that US multinationals operating in the UK do have higher productivity than non-US multinationals in the UK, and this is primarily due to the higher productivity of their IT. Furthermore, establishments that are taken over by US multinationals increase the productivity of their IT, whereas observationally identical establishments taken over by non-US multinationals do not. One explanation for these patterns is that US firms are organized in a way that allows them to use new technologies more efficiently. A model of endogenously chosen organizational form and IT is developed to explain these new micro and macro findings.
Keywords: Information Technology; Multinationals; Productivity
JEL Codes: E22; O3; O47; O52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| internal organization of US firms (L22) | productivity advantages (O49) |
| US multinationals operating in the UK (F23) | higher productivity than non-US multinationals (F23) |
| US multinationals acquiring establishments (F23) | significant increases in IT productivity post-takeover (L86) |
| IT capital (L86) | productivity (O49) |
| effective use of IT (M15) | productivity gap between US and non-US multinationals (F23) |